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Thursday, March 02, 2017

I've been listening to the talk about problems with Bitcoin -- check out the Anarchopulco episodes of Free Talk Live a few days ago for interviews with Roger Ver and Tone Vays advocating for, respectively, the "Bitcoin Unlimited" versus "Segregated Witness" schemes to address increasing waits and increasing transaction fees -- but I hadn't really run into those problems until today.

It's now been right at 11 hours since I sent a small amount of Bitcoin (0.00489662 BTC) with the smallest acceptable miner fee my wallet allowed me to choose (0.0002 BTC). Number of confirmations: Zero.

Eleven hours. Zero confirmations.

I don't know for sure that Ver is right about the solution, but he's right about the problem: Bitcoin is not going to survive as a viable cryptocurrency if it can't be used to complete small transactions in a reasonable timeframe and at a reasonable cost. That is, to survive it must be a usable medium of exchange for regular people buying regular stuff from regular merchants.

Vays seems to think that Bitcoin could just bop on down the road as a "store of value" in which people wanting to move occasionally move large amounts of wealth around would be willing to pay high fees to do so. He doesn't necessarily want it to do that, as I understand him, but he thinks it could.

It can't. If Bitcoin becomes nothing but a wealth storage scheme dependent on paying a bunch of guys outrageous fees for updating the blockchain ledger (that's what Bitcoin mining is), a selloff will commence that will end with the value stored back down in the 10,000 Bitcoin for two pizzas range.

I've been listening to the talk about problems with Bitcoin -- check out the Anarchopulco episodes of Free Talk Live a few days ago for interviews with Roger Ver and Tone Vays advocating for, respectively, the "Bitcoin Unlimited" versus "Segregated Witness" schemes to address increasing waits and increasing transaction fees -- but I hadn't really run into those problems until today.

It's now been right at 11 hours since I sent a small amount of Bitcoin (0.00489662 BTC) with the smallest acceptable miner fee my wallet allowed me to choose (0.0002 BTC). Number of confirmations: Zero.

Eleven hours. Zero confirmations.

I don't know for sure that Ver is right about the solution, but he's right about the problem: Bitcoin is not going to survive as a viable cryptocurrency if it can't be used to complete small transactions in a reasonable timeframe and at a reasonable cost. That is, to survive it must be a usable medium of exchange for regular people buying regular stuff from regular merchants.

Vays seems to think that Bitcoin could just bop on down the road as a "store of value" in which people wanting to move occasionally move large amounts of wealth around would be willing to pay high fees to do so. He doesn't necessarily want it to do that, as I understand him, but he thinks it could.

It can't. If Bitcoin becomes nothing but a wealth storage scheme dependent on paying a bunch of guys outrageous fees for updating the blockchain ledger (that's what Bitcoin mining is), a selloff will commence that will end with the value stored back down in the 10,000 Bitcoin for two pizzas range.